Russia’s Defence Spending Surge: A Post-Soviet High for 2025
In a significant shift in fiscal policy, Russia has announced a substantial increase in its defence spending for 2025, raising it by 25% to a staggering 13.5 trillion roubles (approximately $145 billion). This move marks the highest level of military expenditure since the Cold War, with defence spending projected to account for 6.3% of the nation’s gross domestic product (GDP). The draft budget, submitted to the State Duma on September 30, highlights the Kremlin’s ongoing commitment to military readiness amid ongoing geopolitical tensions, particularly the protracted conflict in Ukraine.
A Strategic Shift in Budget Priorities
The 2025 budget reflects a dramatic pivot from previous plans, which had aimed to reduce defence spending by 21%. This reversal underscores the Russian government’s prioritization of military capabilities over other sectors, as the country continues to navigate the complexities of its "special military operation" in Ukraine, now entering its fourth year. Defence spending will constitute a remarkable 32% of the total budget expenditure of 41.5 trillion roubles, indicating a clear focus on military and security needs.
Historical Context: Defence Spending at Cold War Levels
The projected defence expenditure is not only a reflection of current military needs but also a stark reminder of the historical context in which it operates. The share of GDP allocated to defence spending is reminiscent of the late Soviet era, particularly during the Soviet-Afghan War, when military expenditures were similarly prioritized. The current allocation of 6.3% of GDP is indicative of a state that is increasingly willing to invest heavily in its military apparatus, echoing the strategic imperatives of a bygone era.
Breakdown of Defence and Security Expenditures
In addition to the direct defence budget, the Russian government has allocated a separate 3.5 trillion roubles for national security, which encompasses funding for military and security agencies. When combined, total state spending on defence and security will reach approximately 17 trillion roubles, or nearly 41% of total budget expenditure. This figure highlights the Kremlin’s commitment to bolstering its military capabilities in a time of perceived external threats.
Interestingly, military personnel payments will also see a significant increase, with about 10% of the total defence budget earmarked for salaries. The minimum annual wage for frontline service members is set to reach 3.25 million roubles, reflecting the government’s effort to attract and retain personnel amid the ongoing conflict.
Social Spending vs. Military Expenditure
The stark contrast between military spending and social welfare allocations is striking. In 2025, the government plans to allocate only 6.5 trillion roubles for social needs, which include pensions and subsidies, significantly less than the military budget. Education and healthcare are also set to receive limited funding, with allocations of 1.58 trillion roubles (0.7% of GDP) and 1.86 trillion roubles (0.87% of GDP), respectively. This prioritization of military spending over social welfare raises questions about the long-term implications for Russian society and its economic stability.
Economic Implications and Future Projections
The budget also reveals a concerning trend regarding Russia’s economic outlook. The government has revised its projections for the budget deficit, now estimating it to be 1.7% of GDP for 2024, with a slight improvement to 0.5% in 2025. This increase in military spending comes at a time when oil and gas revenues—critical to the Russian economy—are expected to decline due to lower commodity prices and tax changes. The anticipated revenue from oil and gas sales is projected to fall to 10.9 trillion roubles (5.1% of GDP) in 2025, down from 11.3 trillion roubles expected for the current year.
Finance Minister Anton Siluanov has emphasized the government’s intention to reduce dependency on oil and gas revenues, stating that the share of these revenues in the state budget will decrease to 27%. However, the reality remains that the Russian economy is still heavily reliant on these sectors, and any decline could have significant repercussions.
Conclusion: A Military-Focused Future
As Russia gears up for 2025 with a defence budget that reflects Cold War-era priorities, the implications for both domestic and international landscapes are profound. The substantial increase in military spending signals a commitment to maintaining and enhancing military capabilities, even at the expense of social welfare and economic stability. With the ongoing conflict in Ukraine and rising geopolitical tensions, the Kremlin’s focus on defence spending is likely to continue, shaping Russia’s strategic posture for years to come. The world watches closely as Russia navigates this complex terrain, balancing military ambitions with the pressing needs of its citizens.